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Shale’s Effect on Oil Supply Is Not Expected to Last
By MATTHEW L. WALD
Published: November 12, 2013
WASHINGTON — The boom in oil from shale formations in recent years has generated a lot of discussion that the United States could eventually return to energy self-sufficiency, but according to a report released Tuesday by the International Energy Agency, production of such oil in the United States and worldwide will provide only a temporary respite from reliance on the Middle East.
The agency’s annual World Energy Outlook, released in London, said the world oil picture was being remade by oil from shale, known as light tight oil, along with new sources like Canadian oil sands, deepwater production off Brazil and the liquids that are produced with new supplies of natural gas.
“But, by the mid-2020s, non-OPEC production starts to fall back and countries from the Middle East provide most of the increase in global supply,” the report said. A high market price for oil will help stimulate drilling for light tight oil, the report said, but the resource is finite, and the low-cost suppliers are in the Middle East.
“There is a huge growth in light tight oil, that it will peak around 2020, and then it will plateau,” said Maria van der Hoeven, executive director of the International Energy Agency. The agency was founded in response to the Arab oil embargo of 1973-74, by oil-importing nations.
The agency’s assessment of world supplies is consistent with an estimate by the United States Energy Department’s Energy Information Administration, which forecasts higher levels of American oil production from shale to continue until the late teens, and then slow rapidly.
“We expect the Middle East will come back and be a very important producer and exporter of oil, just because there are huge resources of low-cost light oil,” Ms. van der Hoeven said. “Light tight oil is not low-cost oil.”
Predicting energy trends is notoriously difficult. For example, hardly anybody predicted the revolution in oil and gas production created by fracking in shale.
The energy outlook, which makes projections through 2035, does not anticipate breakthroughs, although it expects continued reductions in cost for electricity from renewable sources. Electricity from wind and the sun, though, may command less revenue going forward, as it becomes harder to integrate into the electric system, because it cannot be turned on at will.
The report projects that by 2035, renewable energy will make up 18 percent of energy supplies, up from 13 percent in 2011. The growth would be faster, except that wood used in cooking or heating, considered a renewable source of energy, is gradually being replaced by modern fuels, like electricity or natural gas, which increases fossil fuel use.
Use of renewable energy for road transport will more than double, to 8 percent by 2035, from 3 percent today, with most of the demand in the United States, the European Union and China, the report says.
But energy demand will grow faster than renewable energy, so carbon dioxide output will rise 20 percent by 2035, the report predicts. In contrast, climate scientists are calling for an 80 percent reduction in carbon dioxide by 2050.
http://www.nytimes.com/2013/11/13/bu...=business&_r=0
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Shale’s Effect on Oil Supply Is Not Expected to Last
By MATTHEW L. WALD
Published: November 12, 2013
WASHINGTON — The boom in oil from shale formations in recent years has generated a lot of discussion that the United States could eventually return to energy self-sufficiency, but according to a report released Tuesday by the International Energy Agency, production of such oil in the United States and worldwide will provide only a temporary respite from reliance on the Middle East.
The agency’s annual World Energy Outlook, released in London, said the world oil picture was being remade by oil from shale, known as light tight oil, along with new sources like Canadian oil sands, deepwater production off Brazil and the liquids that are produced with new supplies of natural gas.
“But, by the mid-2020s, non-OPEC production starts to fall back and countries from the Middle East provide most of the increase in global supply,” the report said. A high market price for oil will help stimulate drilling for light tight oil, the report said, but the resource is finite, and the low-cost suppliers are in the Middle East.
“There is a huge growth in light tight oil, that it will peak around 2020, and then it will plateau,” said Maria van der Hoeven, executive director of the International Energy Agency. The agency was founded in response to the Arab oil embargo of 1973-74, by oil-importing nations.
The agency’s assessment of world supplies is consistent with an estimate by the United States Energy Department’s Energy Information Administration, which forecasts higher levels of American oil production from shale to continue until the late teens, and then slow rapidly.
“We expect the Middle East will come back and be a very important producer and exporter of oil, just because there are huge resources of low-cost light oil,” Ms. van der Hoeven said. “Light tight oil is not low-cost oil.”
Predicting energy trends is notoriously difficult. For example, hardly anybody predicted the revolution in oil and gas production created by fracking in shale.
The energy outlook, which makes projections through 2035, does not anticipate breakthroughs, although it expects continued reductions in cost for electricity from renewable sources. Electricity from wind and the sun, though, may command less revenue going forward, as it becomes harder to integrate into the electric system, because it cannot be turned on at will.
The report projects that by 2035, renewable energy will make up 18 percent of energy supplies, up from 13 percent in 2011. The growth would be faster, except that wood used in cooking or heating, considered a renewable source of energy, is gradually being replaced by modern fuels, like electricity or natural gas, which increases fossil fuel use.
Use of renewable energy for road transport will more than double, to 8 percent by 2035, from 3 percent today, with most of the demand in the United States, the European Union and China, the report says.
But energy demand will grow faster than renewable energy, so carbon dioxide output will rise 20 percent by 2035, the report predicts. In contrast, climate scientists are calling for an 80 percent reduction in carbon dioxide by 2050.
http://www.nytimes.com/2013/11/13/bu...=business&_r=0
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